RURAL MARKETING

PRESENTATION
“e- CHOUPAL”
SECTIONS
INTRODUCTION
Vision & Mission statements

• Vision: Sustain ITC’s position as one of India’s most

valuable corporations through world class
performance, creating growing value for the Indian
economy and the Company’s stakeholders.

• Mission: To enhance the wealth generating

capability of the enterprise in a globalizing
environment, delivering superior and sustainable
stakeholder value.
Business Mix of ITC Ltd.

FMCG
• Cigarettes
• Foods
• Lifestyle Retailing
• Greeting, Gifting & Stationery
• Safety Matches
• Agarbattis

Paperboards & Packaging

• Paperboards & Specialty Papers
• Packaging
Business Mix (Cont’d)
Agri – Business
• Agri-Exports
• e-Choupal
• Leaf Tobacco

Hotels

Group Companies
• ITC Infotech; etc.
CAGR during FY 2005-2008
Market share of ITC Ltd.
Outstanding market leader
• Cigarettes, Hotels, Paperboards,
Packaging and Agri-Exports.

Gaining market share

• Nascent businesses of Packaged
Foods & Confectionery, Branded
Apparel and Greeting Cards.
THE E –CHOUPAL SYSTEM
Indian Agriculture Has Excellent Resources

• Plenty of Arable land

– Rich & diverse Agro-climatic zones
– Strong Agricultural Research
– Large & growing markets

• Indian Farmer’s resourcefulness is also

legendry

– Works very hard ( whole family is on the

farm)
– Takes risk ( on weather ,yields , price)
–
 The Devil
• The Middleman
– Lends Money , source of inputs , buys output

• But blocks information flow & market signals

and extracts larger profit for himself
– Also spins an exploitative cycle of
dependency
– Therefore evil
…And the Implications

Low Risk Taking Ability

Low Margin Low Investment

Low Value Addition Low Productivity

Weak market Orientation

 The e-Choupal Infrastructure

• ITC Kiosk with Internet Access

– In the house of one trained farmer, Sanchalak
– Within walking distance of target farmers

• Warehousing Hub
– Managed by the erstwhile middleman,
Samyojak
– Within tractor able distance of target farmers
Structure of e-Choupal
APPREHENSIONS TO e-
CHOUPAL
RISKS:

• Radical shifts in computing access .

• Threat of unionization of sanchalaks and
rent extractions.
• The diversity of activities and speed of
expansion create threats to efficient
management.
Managing Bureaucracy:
• The agricultural produce marketing act
prohibits procurements outside the mandi.
• The government offered to waive the
mandi tax on the produce procured
through the e-Choupal.
• But tax was not making ITC uncompetitive
therefore ITC continuing paying taxes.
OPERATING ENVIRONMENT
CONSTRAINTS FACED BY ITC
TECHNOLOGY
• Overcoming power constraints
Unreliable
Quality
• Transportation
• Telecom infrastructure
CHALLENGES
• Radical shifts in computing access could
fundamentally alter community-based
business models.
• Threats from sanchalaks
• relationship with the samyojaks
• Scope of the e-Choupal operation
BENEFITS FOR THE
FARMER
1) Relevant & Real-time Information
2) Better Decision Making, Hence Better Value For
Crop
3) Farmer No Longer Bears Transportation Cost
4) Electronic Weighing Facilities – Avoids
Intentional Spillage
5) Treatment As That Of A Respected Customer
6) Increment Of 2.5% Over The Mandi System
7) Information Also Provided To Improve Yield
 Additional Services
Managing Credit Risk Through Sanchalak
Network
Non-cash Loans For Farm Inputs
Loans To Sanchalak
Direct Loans To Farmers Based On Sanchalak
Recommendations
Insurance & Risk Management
SOCIAL IMPACT OF e-
CHOUPAL
Information That Is Available On e-
CHOUPAL

• Weather
• Agricultural best Practices
• Customized Quality solutions
• Intelligent Product Deployment
GAINS FOR ITC
Scale Today and Vision Tomorrow

Year 2007:
6 States
Kiosks: 6400
Villages: 40,000
Farmers: 4.1
million

Year 2012: Wheat

15 States Soybean

Soybean
Kiosks: 20,000 & Wheat

Villages: 100,000 Coffee

Farmers: 10 million Aqua

• Supply Security

• Lowering ITC Logistic Cost

• Better Plan Future Operations

• True Cost Of Intermediation

• Reimbursement Of Transport Costs

Transaction Costs in Mandi Chain
Soybeans Example
Rs per
MT
Trolley Freight to Mandi = 120
Labour = 50
Farmer Incurs Kacchha Adat = 150 370
Handling Loss = 50

Commission to Agent = 100

Processor Cost of Gunny Bags (net) = 75
Incurs Freight to Factory = 120 335
Handling at Mandi = 40

Total Chain 705

Transaction Costs in Choupal Chain
Soybeans Example
Rs per
MT
Trolley Freight to ITC Hub = 120
Labour = 50
Farmer Incurs Kacchha Adat = 150 370 120
Handling Loss = 50

50
Commission to Sanchalak = 100
Processor Cost of Gunny Bags (net) = 75
Incurs Freight to Factory = 120 335 215
Storage & Handling at Hub = 40

Cash Disbursement Costs = 50

Total Chain 705 335

Conclusion
 THANK YOU
1) PANKAJ JAIN - 102
2) ROBIN KAPOOR -
3) VIKAS SHARMA -
4) POOJA GUPTA - 103
5) TUSHAR GARG -
6) ANSHUL YADAV - 92
7) DEEPAK KUMAR -
8) INDRAJEET SINGH - 96